"What turned out to be so devastating was the social impact of [Marx's] writings. The immediate practical effect of Marx's call for a social revolution was to elicit a strong social reaction. The establishment of the Western nations, at the end of the nineteenth century, became scared by Marx's revolutionary call. This by itself explains a lot of the fortune that in academic circles blessed marginalism in the 1870s, whose success was essentially analytical. By simply going back to the pre-industrial age concept of wealth considered as a set of given endowments of scarce natural resources (a stock concept), the marginalists succeeded in reaching an analytical breakthrough, against which Classical economic theory had nothing to compare. They elaborated a formally sophisticated and elegant scheme capable of dealing with the problems of a simpler society - a society in which the more traditional concept of wealth, as consisting of a stock endowment of resources provided by nature in given and, for most components, scarce quantities, could be placed at the very centre of the whole investigation. Hence, not the dynamism of a changing society as, paradoxically, could be observed all around, but the problems of managing efficiently the wealth that existed already became the crucial subject of economic investigation, through the assumption of a perfectly rational behaviour of the single individuals, in a perfectly competitive, strictly atomistic stationary society.
In academic circles, this no doubt represented a radical change, but not in the strict sense of a scientific 'revolution', though some historians of economic thought later hastened to call it so (the 'Marginal Revolution'). Conceptually, it was a 'counter-revolution', an anachronistic achievement, yet a beautiful one, reached with the most sophisticated tools of economic analysis (precisely what the Classical economists had lacked).
At the end of the nineteenth and the beginning of the twentieth century, marginal economic theory, marginal economic theory led to conclusions which were pleasing to the establishment, especially in terms of a splendid detachment from the hot social issues that were boiling up in the real world, and in terms of arguments that could easily be used for the advocacy of unrestricted laissez-faire policies, supposedly leading, in ideal conditions, to optimal positions..." -- Luigi L. Pasinetti (2007).
"The labour theory of value was devised by Ricardo as a stick to beat landlords (rent does not enter into cost of production.) But later, having been advocated by Marx to beat the capitalists, it was necessary for the defenders of the present system to devise a new theory, the utility theory of value. As for Ricardo, it should not be thought that he was consciously biased in his theory, that he was the champion of the rising capitalist against the landlord. ... As for Marx, the fact that the utility theory of value had been found several times before (by Dupuit, Gossen) and had fallen flat while when it was again almost simultaneously published by Jevons, Menger, and Walras in the years immediately following the publication of vol. I of Capital, found suddenly a large body of opinion prepared to accept it and support it is significant enough." -- Piero Sraffa (1927, quoted in Bellofiore 2008)Sraffa references Ashley:
"The marginal conception of value which this generation owes to Jevons and Menger was clearly enough expounded by Longfield in 1833, but it passed unregarded... It is evident that their inattention was due, not to dissatisfaction with what men like Longfield offered them, but to satisfaction with the apparently sufficient formulae they had already mastered...
...Meanwhile ... the dissemination of the teachings of the so-called 'scientific' socialists - of Lassalle's 'Iron Law of Wages,' and Marx's 'Surplus Value' - disposed conservatively minded thinkers to re-examine that Ricardian teaching to which the Socialists, with so much show of reason, were in the habit of appealing." -- W. J. Ashley (1907).
Update (17 Feb.): Added Ashley quotation.
- W. J. Ashley (1907). "The Present Position of Political Economy", Economic Journal, V. 17, N. 68 (Dec.): 467-489.
- Ricardo Bellofiore (2008). "Sraffa After Marx: An Open Issue", Sraffa or an Alternative Economics (Ed. by Gugielmo Chiodi and Leonardo Ditta), Palgrave Macmillan.
- Nikolai Bukharin (1972). Economic Theory of the Leisure Class, Monthly Review Press
- Luigi L. Pasinetti (2007). Keynes and the Cambridge Keynesians: A 'Revolution in Economics' to be Accomplished, Cambridge University Press.